Invite firms with unresolved $2.4bn FX contracts, Muda Yusuf urges CBN

Muda Yusuf, the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), has asked the Central Bank of Nigeria (CBN) to invite companies who have been affected by the $2.4 billion lingering foreign exchange forward contracts in a key move to put the matter at rest.

Speaking in an interview, Yusuf said the affected companies should be given room to offer explanations to convince those who conducted the verification exercise.

“I think it is only fair for the CBN to look into their complaints because initially, what the CBN said was that there was a verification exercise that was done before the conclusion that the forwards that were cleared were the ones that were properly verified and that those that were not cleared, according to the CBN, were not properly verified.

“But the argument is that if there was any issue with those that were not cleared, those companies were not invited to defend themselves or to offer further explanations or shed light so that they can convince those who are undertaking the verification exercise,” Yusuf, a former director general of the Lagos Chamber of Commerce and Industry (LCCI).

Nigerian firms have been in a “severe crisis” over the central bank’s failure to settle $2.4 billion of overdue foreign exchange forward contracts, according to the Manufacturers Association of Nigeria and the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA.)

The top manufacturing body described the non-clearance of the $2.4bn worth of forward contracts as a “breach of contract” which has further exacerbated currency risk for businesses, leading to substantial financial losses and operational disruptions.

Read also: Nigerian businesses hit hard by unresolved $2.4bn FX forward contracts

“So, to that extent, we can argue that they (the CBN) have not been fair to the companies whose outstanding obligations were not paid,” Yusuf said. “If they have that opportunity, I am sure it may not be all of them that will be cleared but not all of them will be denied as it has been the case now.”

CBN boss Olayemimi Cardoso said in February 2024 that of the roughly $7 billion FX forward contract, about $2.4 billion had issues like not having valid import documents.

Meanwhile, MAN and NACCIMA said the non-payment has continued to put a severe strain on manufacturers as commercial banks continue to charge dollar accounts along with other naira bank charges such as 35 percent interest rate on the facilities that these companies have with their banks.

The trade pressure groups had said many businesses borrowed money from deposit money banks as working capital to open clean lines of credit for their companies based on forward contracts allocated by the CBN.

Read also: CBN yet to settle $2.4bn FX forward contract, says MAN DG

Many businesspersons have continued to lament the apex bank’s inability to honour matured FX contracts for over two years since the President Bola Tinubu administration got in the saddle.

The manufacturing bodies had also urged Tinubu and Nigeria’s minister of finance and coordinating minister of the economy, Wale Edun, to intervene in and salvage manufacturers from the protracted situation and current losses and guarantee business stability, productivity, and job security in the country.

In December 2024, Owan Enoh, the minister of state for industry, promised to engage Cardoso over the $2.4bn foreign exchange forward contracts but his efforts have not yielded significant results.